Optivo welcomes Moody’s stable credit rating

 

05 October 2020

image: Sarah SMithResponding to Moody’s Investor Services’ announcement on Friday updating Optivo’s credit rating from A2 (negative outlook) to A3 (stable outlook), Optivo Chief Financial Officer Sarah Smith said:

“Since Optivo formed in 2017 we’ve embarked on a path of measured growth to deliver our charitable objects.  We have chosen to leverage our strong balance sheet together with new government grant funding and new external borrowing to fund much-needed new affordable housing and to invest in the safety of our residents and energy efficiency of our existing homes.

All within carefully controlled financial limits which deliver a strong investment grade credit rating in the ‘A’ category which is important to our long-term capital markets investors.  We expect now to maintain this credit rating.

We recognise the fine judgements Moody’s make in coming to their view, considering our credit strengths versus those of our immediate peers in the social housing sector and against a global portfolio covering a wide range of credits.

We’re pleased Moody’s identify our profitable core business, strong market position, strong balance sheet and unencumbered asset position, strong financial policies, liquidity and stress testing as well as grant flexibility and liquidity as areas of particular credit strength.

And we’re among a leading group of social housing providers bringing Environmental Social & Governance (ESG) investment considerations to the fore, reporting (link) in line with The Good Economy’s May 2020 White Paper.”

Tom Paul, Optivo’s Director of Treasury & Commercial added:

“Moody’s have rated Optivo, and AmicusHorizon before that, for nine years now.  Over that time we’ve admired Moody’s challenge and willingness to engage and hear our story.

Nine years ago, AmicusHorizon was first rated Aa3, which at that time was in the lower half of Housing Association issuers.  Since then a series of efficiency programmes have delivered sustainably higher surpluses, and the merger to form Optivo in 2017 prompted a relative upgrade compared to peers. 

While the business is now bigger our strategy has been consistent: to deliver sector-leading services to our residents and a risk-managed social housing development programme to enable us to help more people in need of adequate housing.

Moody’s placed us on ‘negative outlook’ a year ago, recognising our growth plans, and today’s news gives welcome clarity to us, our lenders and investors.  Our updated A3 rating now puts us in line with most other developing housing associations in our sector, including some of the largest and most frequent debt issuers.
We know our investors hold Moody’s analysis in high regard, and we have no immediate plans to obtain a second credit rating.”

Moody's credit opinion can be found here

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